The Energy Market in Romania

Although in the past years the Italian power company Enel has made considerable profits in Romania, it has just announced it's going to sell its operations in Romania.

Nine years since it first came to Romania, one of world’s power giants, Enel, has decided to leave the Romanian market. In 2013, the Italian company registered a turnover of 1.1 billion Euros, and 290 million Euro worth of profits. The Romanian Energy Minister, Razvan Nicolescu, has already started talks in Rome with Enel representatives, on the selling of Enel’s operations in Romania. This summer, the Italians announced they were preparing to sell the production facilities they had in Slovakia, and the sales divisions in Romania. Enel officials say the plan is aimed at reducing company’s debts, a process that started back in 2013.

In Romania, in 2005 Enel bought from the Romanian state the Electrica Banat and Elecrica Dobrogea electric utilities. In 2008, the company also took over Electrica Muntenia Sud, the company that supplies Romania’s capital Bucharest. Minister Razvan Niculescu has stated recently that Enel Dobrogea, in the south east of the country, is a strategic utility for Romania and has discouraged private companies from submitting purchase offers. Razvan Nicolescu:

“Distribution of electricity is a strategic activity, especially considering what is happening in eastern Romania. ENEL Dobrogea carries out activities that, according to our analyses, are very much related to Romania’s national security. Since privatization, many developments have occurred in the Dobrogea region, including in the military field.”

Enel owns 34% of the distribution market in Romania and also 20% of the sales. In the past years, the prices of electricity provided by the Italian company have gone up constantly, and many of its directors are currently being investigated for bribe-taking.

On the other hand, the Government has set forth for public debate the draft decision regarding the suspension of the gas market liberalization calendar. According to that calendar, which Romania committed itself to observing before the IMF and the European Commission, back in 2012, the price of gas for public consumption should have been 3 % higher starting October 1st. The Romanian market is not ready yet for liberalization, analysts say, especially against the background of Moscow’s reducing gas deliveries to Eastern Europe.

In this war of nerves, the Russian giant Gazprom has two times decided to reduce the amount supplied to Romania, without any formal announcement or explanation. Neither of the decisions has been permanent though. Romania is not the only country affected by the situation. Late last week, line companies in Poland and Slovakia too announced that gas deliveries from Russia had been cut down by 45 and 10% respectively.